Research Article: Complex network analysis of bilateral international investment under de-globalization: Structural properties and evolution

Date Published: April 29, 2019

Publisher: Public Library of Science

Author(s): Xinxin Xu, Sheng Ma, Ziqiang Zeng, Yongli Li.

http://doi.org/10.1371/journal.pone.0216130

Abstract

As many countries are now seeking to protect their own markets rather than indulge in global trade, this paper examines whether this type of de-globalization behavior has been having any effect on international investment relationships through a systematic analysis of international investment network (IIN) in 127 economies from 2005 to 2016. Unlike previous studies that only analyzed portfolio investment data, the bilateral international investment data were estimated using a matrix-based iteration approach, and the IIN established using complex network theory. Using bilateral international investment data made the results more reliable and somewhat closer to reality. To analyze the structural properties and evolution of the IIN, complex network indicators including a new one named node similarity were developed. The node similarity is defined as the proportion of common relationships of the current economy between two successive years which is useful to reveal the dynamics of the IIN. This paper finds that there are heterogenous and hierarchal properties in the IIN, several economies had a wide range of international investment partners, while most others had only a small range of investment partners and were more likely to form tight groups within the network. The economies in the IIN were tending towards smaller but closer communities, a new trend of regional financial cooperation was developing. The IIN is divided into more communities over time while the top active and central economies often locate in different communities. These findings imply that the structure of the IIN is changing geographically during the de-globalization rather than independent with regions. The regional cooperation has made positive effect on the international investment. The governments should ensure that they continue to support liberal financial policies and to promote better regional financial cooperation.

Partial Text

After the 2008 global financial crisis, the international investment market fluctuated dramatically as many countries sought to disengage their economies from global financial influences [1], which consequently changed the international development landscape. In an attempt to understand these changes, this paper identifies the structural properties of the current international investment network to assess whether these de-globalization trends have been reflected in investment behavior.

To establish the IIN, international investment position data on 127 economies (see S1 Appendix for a detailed list) were collected after which the bilateral positions between the different economies were estimated using the RAS algorithm as detailed in the following.

After the IIN was built, several indicators were developed to analyze the structural properties and evolutions of the network from 2005 to 2016.

In this paper, an IIN for 127 economies was established using bilateral investment position data estimated using the RAS algorithm, after which the structural properties and evolution of the IIN from 2005 to 2016 were systematically analyzed using statistical indicators.

 

Source:

http://doi.org/10.1371/journal.pone.0216130

 

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